The SEC approved the Public Company Accounting Oversight Board's ("PCAOB") Auditing Standard No. 5 and adopted a new definition of "significant deficiency". The new standard, which will replace PCAOB Auditing Standard No. 2, is expected to make Section 404 audits more effective and efficient because it is more risk-based, principle-based and scalable to company size and complexity. The new standard will be effective and required for integrated audits conducted for fiscal years ending on or after November 15, 2007.

Click here for PCAOB Auditing Standard No. 5 and the related adopting release.